Ritholtz: A Different Take on Bulls and Bears

Barry Ritholtz of FusionIQ and The Big Picture blog says he is bullish on stocks — but it’s not because of the economy. Ritholtz tells Yahoo! Daily Ticker that he started the year “as fully invested as we ever get,” despite “weakening fundamentals and the possibility of a recession”. The reason he’s bullish: Central banks around the world are continuing to flood the financial system with liquidity. That, he says, leads to a difficult task of “riding that wave and hoping you can jump off before the fire hose gets shut off”. Ritholtz also offers an interesting take on bull and bear markets. His bear/bull distinction doesn’t rest only on the direction of the market; it also rests on multiple expansion and contraction — that is, whether investors are willing to pay an increasing or decreasing amount for a dollar of earnings. He says he thinks we’re still in a secular bear market, and expects to see a 20% to 30% drop in stocks at some point before a true bull market starts.